Finally Some Good News For Greece?

After more than eight years of being confined to the European Union’s intensive care ward with systemic, near-death, and highly contagious economic and political maladies is Greece finally ready to hobble out of bed? Although the team of EU fiscal doctors, aided by consultants from the International Monetary Fund, is not completely convinced there has been a noticeable positive shift in the tone of comments from friends and family.

We spent several months in Greece last year, and the mood was unremittingly gloomy all the time. Almost every conversation began and ended with a litany of the country’s problems: the idiocy of the government, the evil of the creditors, the collapse of the financial system, and on, and on, and on. The newly elected Syriza government, together with its tragi-comic finance minister Yiannis Varoufakis, was trying desperately to implement its version of the almost universally unsuccessful leftist economic and administrative ideology. All it succeeded in doing was to demonstrate its own incompetence and find new and unique ways to infuriate the people who were trying to keep Greece afloat. At one point, people on various islands were seriously investigating ways to secede from mainland Greece and create their own little versions of paradise.

While the underlying economic reality may not have changed very much, the election of a young, very smart, and dynamic leader as head of the main opposition New Democracy party has injected a whiff of change, the possibility of something better. Kyriakos Mitsotakis is the scion of one of Greece’s leading political families, but people should be careful of thinking of him merely as new wine in an old bottle. In addition to showing himself to be politically astute, he brings an impressive educational and professional resume to the job.

           

Kyriakos Mitsotakis -- the new leader of New Democracy

He graduated summa cum laude from Harvard and has graduate degrees from Stanford and the Harvard Business School. In addition to idiomatic English, he speaks French and German. He spent time in London working for the McKinsey consulting company. He also served as Minister of Administrative Reform in the government of Antonis Samaras from 2013 – 2015.  I met Mitsotakis several years ago when he was managing director of the venture capital arm of the National Bank of Greece. We worked on a cross-border investment project involving Greece and Turkey, and I found him smart, pragmatic, and focused on solving problems rather than advancing any particular theoretical approach.

Greece’s European partners will breathe a sigh of relief at the prospect of dealing with someone in Athens who literally, and figuratively, speaks their language. They would be making a serious mistake, however, to think that Mitsotakis will roll over and accept anything that comes out of Brussels. What they may well find is that instead of facing the profoundly unserious bombast of Syriza, they will be facing deeply analytical, thorough, and logical counterproposals to defend and advance Greece’s position. If Mitsotakis ever gets elected prime minister his counterparts in Brussels better be prepared to send the A Team to meetings with Greece.

Many of the people I spoke with on the island of Andros and in Athens greeted his victory in the race to lead New Democracy as a sign of very, very cautious hope.

“We hope, we wish,” said one shop owner. But with an expressive shrug of her shoulders she added, “But we really don’t trust any government anymore.” She, like thousands of other small businesses, is caught in the uncomfortable position of facing mounting taxes long before there is a hint of the economic recovery that could provide the money to pay the taxes.

A financial analyst in Thessaloniki said that Mitsotakis’ election has “re-energized the middle class. He is the flip-side of Syriza.” Others say Mitsotakis represents an important change in perception.

“Look, nothing fundamental has suddenly changed in Greece. Unemployment is still about 20%, the banks are fragile, and it looks like the capital controls will have to stay in place for the rest of 2016. But, in our politics, perception is very important. And right now, Kyriakos is benefitting from the perception that he may be the one to lead us out of this quagmire. The same dynamics of anger at the existing government and hope for change that brought Syriza to power in the first place could now benefit Kyriakos.”

Mitsotakis is certain to face the charge that he is nothing more than the latest manifestation of the dynastic politics that have plagued Greece for generations by focusing on punishing perceived enemies and rewarding clients rather than solving national problems. Another senior executive laughed and said ‘clients’ are nothing new in Greek affairs.

“Go back and re-read the Iliad. Homer gave the gods plenty of ‘clients’. Hera and Athena, for example, worked hard for the Achaeans while Aphrodite supported the Trojans. Kyriakos will undoubtedly face pressure from some so-called ‘clients’ but I think he is clever enough build bridges rather than simply settle old political scores.”

Under his very new leadership New Democracy has already received a bounce in the polls that puts them a few points ahead of Syriza.  It remains to be seen if Mitsotakis can ride this momentum to victory in a general election, but at this point not very many people would bet against that possibility.